While issues of fact can preclude summary judgment in some cases involving failure to cooperate and misrepresentation, a New York federal court recently granted summary judgment to an insurer in this context. In D’Andrea v. Encompass Ins. Co. of Am., No. 15-CV-467-MJR, 2018 U.S. Dist. LEXIS 146446, 2018 WL 4095098 (W.D.N.Y. Aug. 28, 2018), the insured was seeking property insurance coverage for a fire loss that occurred at a two-unit residence purportedly owned by the insured and rented to tenants. In submitting his insurance claim, the insured provided three sworn statements in proof of loss, including one for the loss of the dwelling and one for loss of use of the dwelling. The dwelling proof of loss requested $225,000 in damages and listed the insured as the owner of the premises.

During his examination under oath (“EUO”), the insured testified that at the time of the fire, no names other than his name were on the deed as title owner of the Premises and that there was no mortgage on the Premises. He also testified that he did not transfer ownership of the Premises to his son, and that there had been only a “verbal agreement” between him and his son to sell the Premises. Both of these statements regarding the deed and mortgage for the premises were subsequently revealed to be false.

Based on these (and other) apparent misrepresentations in the insured’s proofs of loss and at his EUO, the insurer denied the claim. Thereafter, the insured brought suit, and, after the close of discovery, the insurer moved for summary judgment, arguing, in relevant part, that the insured was not entitled to coverage under the Policy because he breached the Policy’s Concealment or Fraud and Cooperation conditions.

The Court considered each apparent misrepresentation in turn. With respect to the ownership of the Property, the insured argued that the EUO questioning regarding ownership was ambiguous, and that even though he had deeded the Property to his son before the fire, he felt he still owned the Property because he still exercised control over the Property. The court found this explanation “dubious,” and regardless, explicit questions regarding whose name was on the deed were answered untruthfully at the EUO. The court recognized that, while actual intent to defraud (which is a required element of establishing fraud in New York) is “rarely sufficiently proven to warrant summary judgment,” in this case, the insured’s explanation that he testified mistakenly in his EUO was “implausible,” and that the insured had therefore failed to come forward with any evidence from which a reasonable juror could conclude that he acted with anything but intent to defraud the insurer. The court granted the insurer’s motion for summary judgment based on a finding of breach of both the Concealment or Fraud and Cooperation conditions.

D’Andrea is the latest in a recent line of court decisions granting summary judgment to insurers in fraud cases finding insureds’ suspicious explanations for untruthful statements during the claim process insufficient to defeat a motion for summary judgment. We will continue to report on similar decisions as they are published.

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